Declining worker power and American economic performance

Anna Stansbury and Lawrence H. Summers (yes, that one!) over at Brookings:

Increased monopoly power is commonly believed to explain the trends in labor income and corporate profits—but it is hard to reconcile with the substantial falls in average unemployment and inflation over the period, argue the authors, Anna Stansbury and Lawrence H. Summers of Harvard University.  A decline in worker power can explain all these trends, they argue.

“Declining unionization, increasingly demanding and empowered shareholders, decreasing real minimum wages, reduced worker protections, and the increases in outsourcing domestically and abroad have disempowered workers with profound consequences for the labor market and the broader economy,” the authors write in Declining Worker Power and American Economic Performance.

If decreased worker power is a major cause of increasing inequality and lack of progress in labor income, then “it raises issues about the extent to which corporations should be run solely for the benefit of their shareholders” and “would suggest that policy should tip the balance more in the direction of supporting union organizing activities and empowering unions,” they write.

More here. (The report can be found here.)